SWEDISH electric car maker Polestar said yesterday it will go public by merging with a US-listed blank-check firm backed by billionaire Alec Gores and investment bank Guggenheim Partners at an enterprise value of $20 bn (£14.6bn).

The deal with Gores Guggenheim will provide Polestar cash proceeds of over $1bn, including $800m from the special purpose acquisition company (SPAC), and a PIPE, or private investment in public equity, of $250m from institutional investors.

The deal comes at a time when large SPAC mergers have become rare, as the business of blank-check dealmaking deteriorated rapidly over the summer after investors were spooked by the poor financial performance of many SPACs and a regulatory crackdown led by the US Securities and Exchange Commission over their disclosures.

Polestar, founded in 2017 by Volvo Car Group and China's Zhejiang Geely Holding Group, also counts Hollywood actor Leonardo DiCaprio among its investors.

The premium EV maker's offering includes two models: a hybrid car known as Polestar 1 and a fully electric Polestar 2. It previously said it has another model in development called the Precept, which is a larger sedan.

Polestar delivered about 10,000 vehicles globally last year and expects to sell about 290,000 vehicles per year by 2025. It predicts it will rake in $1.6 bn in revenue this year and double that number next year.

The company's listing plan comes as automakers shift their focus to environmentally friendly vehicles amid rising pressure from lawmakers and investors concerned about climate change.

Polestar joins other EV makers in the public market, including Tesla and Lucid Motors , which went public in a $24bn SPAC deal in February.

Polestar touts an asset-light business model as a key differentiator by having existing productions lines provided by backers Volvo and Geely, so it can focus on investing in research.

"We don't need the capital to build the factory. We can put the money raised into developing the technology and the market," Thomas Ingenlath, Polestar's chief executive, said in an interview.

Reuters

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